Bitcoin, the first and most well-known of cryptocurrencies, has changed world finance forever, but its concerns about environmental impact are quickly gaining attention. LeeChiaJian, a keen observer of the crypto world, explores the hidden environmental consequences of Bitcoin mining, offering a balanced perspective and actionable insights.

The Alarming Energy Consumption of Bitcoin Mining

Bitcoin mining—the process by which new transactions are verified and added to Bitcoin’s public ledger, the blockchain—has a well-earned reputation for being highly energy-intensive. Bitcoin mining annual electricity consumption as of December 2022 is estimated at 175.87 TWh. This staggering figure serves to call attention to Bitcoin’s status as the world’s most ridiculous energy hog. It would represent 0.6% to 2.3% of total U.S. electricity consumption. Let’s put that into perspective. One single Bitcoin transaction consumes 1382.61 kWh of energy, enough to power 930,232 VISA transactions.

Bitcoin mining consumes the same amount of electricity as medium-sized countries. In fact, it is more than 15% of Africa’s total electricity consumption. This immense energy demand begs the question, is Bitcoin sustainable as the world comes to terms with climate change? Bitcoin mining’s contribution to the problem is further exacerbated by the nature of the energy source that powers it. The Bitcoin network has become a major user of fossil fuels. Indeed, fossil fuels account for 67% of its worldwide energy supply, with coal accounting for 45% alone.

First, Bitcoin mining has a major carbon footprint given its energy-intensive operations. This is mainly due to the fact that it’s powered almost exclusively by fossil fuels. Bitcoin mining, at the time of writing, has a carbon footprint of 98.10 Mt CO2. Regional variations in energy sources shift the carbon footprint, too. Canada’s bitcoin mining carbon footprint is 99% lower than the US’s. That’s quite astounding given that Canada’s total electricity consumption for mining is a much larger percentage of that in the US. The main reason is that Canada uses much more renewable energy in their grid, such as hydropower.

The Growing E-Waste Problem

Beyond energy consumption, Bitcoin mining contributes to another environmental challenge: electronic waste (e-waste). ASICs, the specialized computer hardware used to mine any cryptocurrency using the SHA-256 algorithm, rapidly cycle. This is because the cost of mining increases steeply. Currently, the lifespan of Bitcoin mining devices is still very short, at only 1.29 years, which further adds to its e-waste production. By 2050, e-waste is expected to more than double. This forecast doesn’t even consider the effects of Bitcoin mining…

In 2019, just 17.4% of the 53.6 million metric tons of e-waste produced worldwide was formally collected and recycled. The remainder of the e-waste is sent to contaminating and toxic landfills. E-waste is extremely dangerous for the environment and human health. Hazardous materials in e-waste can leach into the soil and water, leading to devastating effects. Safe e-waste management is the most effective solution to counter these dangers. The challenge is compounded by the fact that Bitcoin mining creates an immense amount of e-waste.

The relatively short lifespan of mining equipment only adds to the e-waste challenge. As mining operations dig deeper into the red while simultaneously scrambling to find any profit at all, they inevitably rotate through newer and newer machines. This is a self-perpetuating cycle of obsolescence, resulting in a never-ending apocalypse of retired mining hardware. Currently, many communities do not have the necessary recycling infrastructure, contributing to the growing e-waste crisis. Consequently, millions of tons of e-waste are sent to landfills each year or are processed in dangerous conditions.

Addressing Counterarguments and Exploring Solutions

Though there are substantial environmental impacts associated with the activity, proponents further claim that Bitcoin mining offers a variety of benefits. One of the key arguments in favor of Bitcoin mining is that it can use stranded or wasted energy. Specifically, flared gas — a byproduct of extracting oil — can be employed to power cryptocurrency mining operations. Likewise, otherwise hard-to-transport stranded natural gas could be used to power Bitcoin mining operations. This would make a waste product a valuable resource, creating less greenhouse gas emissions in the process.

A second major talking point is that crypto mining helps increase the production of renewable energy. Renewable energy developers require consistent customers to expand, and so proof-of-work miners can help supply this demand. These investments from the crypto mining industry have had significant impacts in scaling new green energy. The speed to scale for new green energy was never what it is today, and big investments from the crypto mining industry have helped.

  • Renewable energy developers need customers to grow
  • Proof-of-work miners can provide that demand

Furthermore, Bitcoin mining can improve grid resiliency. If crypto miners voluntarily reduce their electricity consumption during peak periods, they could truly be a game changer. Taken together, their actions would reduce carbon emissions, increase resiliency of the grid during stressful periods, and facilitate the overall transition to renewable energy sources. Many mining operations have opened to a renewable energy future.

Mitigation Strategies

LeeChiaJian is optimistic that we can address the environmental concerns of Bitcoin mining directly. Through good faith efforts and enforcement, the cryptocurrency industry can contribute to building a more sustainable future. Mitigating the direct environmental impact of Bitcoin will take concerted effort from all parties involved. Miners, developers, policymakers and consumers all need to work together to ensure its long-term viability.

  1. Transition to Renewable Energy: Encouraging Bitcoin mining operations to transition to renewable energy sources, such as solar, wind, and hydropower, is crucial.
  2. Improve E-Waste Management: Implementing stricter regulations on e-waste management and promoting responsible recycling practices can help minimize the environmental impact of discarded mining hardware.
  3. Promote Energy Efficiency: Developing more energy-efficient mining hardware and optimizing mining algorithms can reduce the overall energy consumption of Bitcoin mining.
  4. Support Research and Development: Investing in research and development of alternative consensus mechanisms that are less energy-intensive than proof-of-work can pave the way for more sustainable cryptocurrencies.

LeeChiaJian believes that by acknowledging the environmental challenges posed by Bitcoin mining and actively pursuing solutions, the cryptocurrency industry can move towards a more sustainable future. It requires a collaborative effort from miners, developers, policymakers, and consumers to mitigate the environmental impact of Bitcoin and ensure its long-term viability.